Development of a micro-level circular economy performance measurement framework for automobile maintenance garages

Abstract

Organizations across the world are thriving for ensuring sustainability in their operations and business practices. The circular economy is a recent development of this decade that enhances sustainability initiatives. Apart from manufacturing, the service sector also can contribute to the promotion of a circular economy. Maintenance service of automobiles is a promising service industry where circular economy concepts can be adopted and implemented. Several automobile OEMs (Original Equipment Manufacturers) are promoting the concepts of circular economy through their dealer garages. However, there is a requirement for a performance measurement framework for assessing the circular economy performance measurement of individual garages for continuous improvement. In this paper, an attempt is made to develop a framework for circular economy performance measurement of automobile garages using a graph theoretic approach. Various performance measurement attributes of circular economy performance of garages are identified through literature and garage visits. The interrelationships among attributes are modeled through a graph theoretical approach. A directed graph (digraph) of the circular economy performance (CEP) is developed, where its nodes represent circular economy performance attributes while the edges show the degree of interrelationships. An equivalent matrix to the digraph will generate a circular economy performance function (CEPF) that will result in the development of a circular economy performance index (CEPI). The developed framework is implemented for measuring the circular economy performance of an Indian automobile OEM's dealer facility. In ideal case, the value of Circular economy performance index ratio (CEPIR) should be ‘1’. In the illustrated case of a garage the estimated value of CEPIR is 0.234 which is considered to be poor that shows the garage needs changeover for improving CE initiatives. Further, sensitivity analysis was carried out and it was found that improvement in sustainable sourcing initiatives will result in proportional increases in the circular economy performance index. The developed index will help the garage organizations as well as their OEMs to have feedback on their practices for circular economy and understand the weak links.